In a speech ten years ago, I said, “Because of the Euro, no euro nation can control its own money supply. The Euro is the worst economic idea since the recession-era, Smoot-Hawley Tariff. The economies of European nations are doomed by the euro.”

Since that date, this blog repeatedly has said, in various ways, “For the euro nations, long term survival requires one of two, and only two, events:”

“1. Adopt some form of a sovereign currency, and become Monetarily Sovereign
or
2. The EU give (not lend) euros to its member nations as needed (i.e. political merger).

The International Monetary Fund’s memo on Greek debt sustainability, explain(s) why the I.M.F. cannot participate in a new bailout program unless other European countries agree to huge debt relief for Greece, has provided the “Emperor Has No Clothes” moment of the Greek crisis, one that may finally force eurozone members to either move closer to fiscal union or break up.

The I.M.F. memo amounts to an admission that the eurozone cannot work in its current form.

It took them all these years to admit the obvious — that monetarily non-sovereign nations (nations that cannot control their money supply) must have income — money coming from outside their borders — in order to survive long term.

You are monetarily non-sovereign. You must have income in order to pay your bills, long term. You can drain your savings for a while, but eventually your savings will run out.

Businesses are monetarily non-sovereign. Long term, they must have income. They too, can drain their savings, but only for a while.

Cities, counties and states are monetarily non-sovereign. Long term, they must have income, too. Taxes won’t suffice, for taxes are not income. They are a drain on citizens’ savings.

For cities, counties and states, income can take three forms:
1. Net exports of goods and services
2. Tourism
3. Payments from a higher government (Cities receive from counties and states; states receive from a Monetarily Sovereign federal government)

When a nation takes on the euro, it surrends the single most valuable asset any nation can have: Its Monetary Sovereignty.

More valuable than natural resources, population or education, Monetary Sovereignty allows a nation to buy anything and to pay any bill.

One might have hoped that at long last, the IMF finally will have admitted this most basic of all economics facts.

It lays out three options for achieving Greek debt sustainability, all of which are tantamount to a fiscal union . . .

Yes, a fiscal union, like a United States of Europe.

But just as we hoped to believe the IMF has begun to say the obvious, it disappoints us:

. . . an arrangement through which wealthier countries would make payments to support the Greek economy.

Not coincidentally, this is the solution many economists have been telling European officials is the only way to save the euro — and which northern European countries have been resisting because it is so costly.

The three options laid out by the I.M.F. would have different operations, but they share an important feature: They involve other European countries giving Greece money without expecting to get it back.

No, no, no.

Where would the “other European countries” obtain the euros they would be expected to give to Greece and the other impoverished euro nations? Answer: They would have to give less to their own citizens.

To save the euro, a failed concept, the IMF has proposed a sure-to-fail concept: Monetarily non-sovereign nations supporting other monetarily non-sovereign nations, requiring austerity for all.

The rich people who run Europe are not satisfied with enslaving some of Europe’s citizens. They have hatched a plan to enslave all of Europe’s citizens, even those in nations that, to date, have avoided recession and depression.

The troika [European Commission (EC), the European Central Bank (ECB)and the International Monetary Fund (IMF)] together are Monetarily Sovereign. They have the unlimited ability to create euros.

They have the unlimited power to give (not lend) euros to member nations, thus growing the economies of those nations.

Already having impoverished much of the eurozone, the IMF proposes enslaving the entire eurozone.

One of the debt relief options proposed by the I.M.F. is “explicit annual transfers to the Greek budget,” that is, direct payments from other governments to Greece, which it could use to make its debt payments.

A second option is extending the grace period, during which Greece would be relieved of the obligation to make interest or principal payments on its debt to European countries, through the year 2053 — at the expense of Greece’s creditors, most of which now are other European governments.

The third option floated by the I.M.F., (is) a cancellation of a portion of Greece’s debts (to other nations).

The memo makes clear what the real cost to Europe of continued eurozone membership for Greece is: If European governments want to keep Greece in, they’re going to have to put up a lot of money in one non-loan form or another, money they will give Greece that they never get back.

The entire concept is ludicrous. Greece is deeply in debt. Its money supply has been drained.

Greece cannot pay its debt out of income, because it has no net source of income, and being monetarily non-sovereign, it cannot create euros.

The IMF “solution”: Force other monetarily non-sovereign nations to drain their own money supplies.

In short, rather than trying to make all euro nations rich, the IMF proposes to make all euro nations poor.

It is a concept that even the uneducated would realize is stupid . . . except for one thing: The troika is not stupid. They know exactly what they are doing.

The goal is power. By impoverishing more euro nations, the troika (the only entity with the unlimited power to create euros) increases its own relative power.

Why settle for just the Greek people crawling and begging for food, clothing and housing, when one can have all Europeans on their knees, at your mercy?

It is a cruel plan devised by cruel people, who have seized on the opportunity to conquer Europe, not by force of arms, but by force of money — a bloodless coup that will dominate a continent.

Is it any wonder that the thought of Greece, freeing itself from the chains of euro-austerity, had the troika in such a panic.

Unfortunately, the government of Greece seems to have failed its own people, and sold them into slavery.

The Greek people voted to free themselves. They voted against austerity. They tried.

The Ten Steps will add dollars to the economy, stimulate the economy, and narrow the income/wealth/power Gap between the rich and the rest.
——————————————————————————————————————————————

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
1. A growing economy requires a growing supply of dollars (GDP=Federal Spending + Non-federal Spending + Net Exports)
2. All deficit spending grows the supply of dollars
3. The limit to federal deficit spending is an inflation that cannot be cured with interest rate control.
4. The limit to non-federal deficit spending is the ability to borrow.

THE RECESSION CLOCK

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

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15 Responses to –Has the IMF admitted the obvious? Close, but no cigar.

European Union finance ministers also approved 7 billion euros ($7.6 billion) in bridging loans to keep Greece afloat, allowing it to make a bond payment to the ECB next Monday and clear its arrears with the International Monetary Fund.

Greek citizen: But I don’t have 1,000 euros. Because of your austerity, I don’t have a job, don’t have income, can’t afford food, and I’m behind in my mortgage.

EU loan shark: That proves what a deadbeat you are. Here’s what I’ll do for you: I’ll lend you the 1,000 euros for one week. You can pay me what you owe me today. Then, next week, you’ll have to pay me 1,100 euros.

Greek citizen: How will I do that, with no job and no source of money?

EU loan shark: Feed your children less. Sell your house and live in the street. This is all your fault for being poor.

The troika is operating short sighted, ever worsening the problem down the road as bailouts will grow bigger with each cycle. Yet the will of the voter remains subverted and, ironically, isn’t Greece the birthplace of democracy??

I wonder what the voters will do the next time and how long will they continue to take the short end of the stick before they realize their vote means nil. Katie bar the door. We haven’t seen the end of their misery and rebellion. Greece is in for a revolution — a welcome event in disguise.

Other Euro nations will not follow, I feel, unless they get to the same point as Greece, then their hands will be forced, IMO. They’ll go along to get along only for so long then opt out. The “your owe” experiment will gradually dissolve back to independence and monetary sovereignty.

Although the EU speaks of the “Grexit” being a disaster, the fact remains that more than a dozen nations gave up their sovereign currencies, and the world survived. One nation reclaiming its sovereign currency would be a tiny blip on the financial radar screen.

Within a year or two, Greece would be one of the more prosperous nations in Europe — no austerity — unless it keeps the same politicians it now has.

Ostensibly, the whole idea of the Euro was that of a common currency which would allow for international – regional convergence. Instead they got divergence on account of widely differing cultures and ways of life. Greece “should” pay back what they borrowed, but how do you do that without a way to grow the economy? The poor southern Europeans are seeing Greece as a crystal ball into their own futures.

The whole idea has feet of clay. Only a matter of time before Germany gets their vampire-empire asses handed to them unless they develop a MS based model.